17 March 1999
RICHARDSON, PICKERING FAVOR EXPANSION OF OIL-FOR-FOOD PROGRAM
(Senate skeptical about doubling Iraq oil production) (950) By William B. Reinckens USIA Staff Writer Washington -- Undersecretary of State for Political Affairs Thomas Pickering and Energy Secretary Bill Richardson testified March 17 that the U.N.'s Oil-For-Food program for Iraq is an essential component of the U.S. Administration's Iraq strategy and is, therefore, key to our national security. The officials testified before a joint hearing of the Senate Foreign Relations Committee and the Senate Energy and Natural Resources Committee on the Clinton Administration's proposal that the United Nation's Oil-for-Food Program for Iraq be permitted to double its oil production to better meet the humanitarian needs of the country. Both Democratic and Republican Senators expressed strong opposition to the proposal. Senator Joseph Biden said the issue of doubling Iraq's oil production ceiling under the UN program would inject a legitimate domestic issue into a complex foreign policy. "Many of our domestic oil producers are hurting because of the low price of oil. Increases in Iraqi oil production have come at the wrong time by exacerbating the oversupply in the oil market and added to downward pressure on prices," he said. Richardson outlined four key factors that have influenced low oil prices over the past four years: the return of Iraqi exports to the world market; reduced oil demand as a result of the economic crisis in Asia; dramatically warmer then normal winters since 1996, and increased production in 1997 from some of the OPEC countries. "Whatever effect Iraqi production has had on prices has already occurred and will not have any additional significant price effect," said the Energy Secretary. Last month, Richardson traveled to the Gulf to discuss energy issues and the bilateral relationship between the United States and Saudi Arabia, the world's leading oil producer. Richardson, a former Congressman and U.S. Ambassador to the United Nations, also said that the UN's Oil-for-Food Program has denied Saddam Hussein over $120 billion for his weapons of mass destruction programs because of the improved contracting and monitoring reviews conducted by the UN. He added that oil revenues are kept in UN controlled escrow accounts. Richardson noted that Iraq is now producing around 2.5 million barrels of oil a day and exports approximately $3 billion worth of oil every six months. "This is well below the current $5.2 billion dollar ceiling that has been set by the UN Security Council," he said. Under the United Nations program, he said, Iraq has been able to import 2.75 billion worth of food, $500 million worth of medicine and $400 million worth of water, sanitation, electricity and education. "As a result, the average daily food ration for the Iraqi population has risen from 1,275 calories a day in 1996 to 2100 calories today." Richardson told the senators that under the Oil-for Food program, Iraqi President Saddam Hussein was "able to starve his own people and blame the sanctions for their suffering." Undersecretary Pickering said that by lifting the ceiling on Iraqi oil production, Iraq would not be able to increase its oil exports. "To increase oil exports, Iraq first would have to repair its energy infrastructure, which will take many months," he said. "But, over time, allowing increased Iraqi oil exports would address concerns regarding the shortfall in revenues needed for humanitarian purchases," he said. "Saddam would not benefit from these increased oil export revenues," Pickering said, "the revenues would be put in an escrow account and released only for the purchase of humanitarian goods." Pickering also noted that "by lifting the ceiling it would serve to counter growing calls from Arab states and Security Council members to lift the sanctions outright." "By removing the root cause of calls for removing sanctions, we free our allies in the Arab world and elsewhere to support our broader Iraq policy objectives," he said. Pickering also said that lifting the oil production ceiling would draw Security Council support away from more radical French and Russian proposals to lift sanctions altogether. "Our Iraq sanctions policy, however, has never been linked to the price of oil on the world markets," the Undersecretary stressed. "Allowing oil price considerations to drive our sanctions decisions, or seeking to use sanctions to target oil prices, would undermine our ability to provide for the humanitarian needs of the Iraqi people as well as to maintain an international consensus aimed at containing Saddam Hussein," he said. Pickering emphasized that the Clinton Administration's policy is to contain Saddam Hussein until he is removed from power. He said that the United States would continue to maintain sanctions on Iraq, enforce the no-fly zones in the north and south, and maintain a robust military presence in the region. He also said that the U.S. would use force if Iraq reconstructs its prohibited weapons programs, threatens it neighbors, or moves against the Kurds in the north. Pickering expressed concern about the illegal traffic of oil and petroleum products out of Iraq to Turkey, Jordan, Syria and the Gulf, saying, "Each of these avenues presents unique problems, and we are addressing each of them." He noted success in the past year in preventing smuggling of Iraqi gas and oil through Iranian territorial waters and the use of "surge operations" by the multi-national Maritime Interception Force (MIF) in the northern Gulf. "As for Jordan, although the UN has taken note of Jordan's trade of bartered humanitarian goods in exchange for Iraqi oil at concessionary prices, we continue to work to reduce Jordan's dependence of Iraqi oil," Pickering said.
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